MEDICARE FRAUD TOTALING $562 MILLION in genetic and cardiovascular tests is at the heart of recent federal criminal cases involving telemedicine that names clinical laboratory owners, physicians, and healthcare marketers as defendants.
A host of indictments were announced on July 20 by the U.S. Department of Justice (DOJ). The 13 defendants collectively are accused of fraudulently billing for tests and paying related kickbacks.
For leaders of clinical laboratories and pathology practices, the court documents outline the efforts that some lab owners allegedly take to evade complying with Medicare rules.
The charges also paint a clear picture about the current focus of federal prosecutors when it comes to clinical lab test fraud. (For more analysis on these cases, see “Attorney Advises Labs to Track Genetic Test LCDs” here.)
An important point to note: Medicare only covers genetic tests for diagnostic purposes in limited circumstances, such as when the testing is order by a physician to treat a patient’s condition. Medicare does not cover genetic testing done for predictive purposes.
Of interest is fraudulent billing of $463 million allegedly directed by just four laboratory owners. Two of the cases involve not just genetic testing, but also telemedicine. It shows how alleged fraudsters are using virtual consultations as the triggers to large volumes of inappropriate lab testing. Details of this case follow.
Telemedicine Docs Sign Off
Jamie McNamara, 47, of Lee’s Summit, Mo., was indicted on nine counts of healthcare fraud and related conspiracy, three counts related to paying kickbacks, and six counts of money laundering.
According to the indictment, McNamara was “beneficial owner” of four labs in Orleans Parish, La., and Harris County, Texas. The DOJ termed these establishments collectively as McNamara Labs. A beneficial owner holds shares in a company indirectly, such as through a bank. McNamara also operated three marketing firms in Missouri.
From November 2018 to July 2020, McNamara Labs allegedly submitted $174 million in false claims for cancer and cardiovascular genetic testing that was not medically necessary. Of these claims, Medicare reimbursed $55 million.
McNamara Labs did not perform genetic tests. “Instead, the McNamara Labs referred the specimens collected to other reference laboratories that actually performed the tests, and the McNamara Labs billed for the tests performed,” according to the indictment.
The DOJ has prosecuted organizations for using similar arrangements, often referred to as pass-through billing. (See TDR, “DOJ Indicts 10 Individuals for Pass-Through Lab Test Billing Fraud,” Aug. 24, 2020.) However, in past cases it has been more common for a rural hospital to bill for the performed lab tests.
The U.S. Attorney’s Office for the Eastern District of Lousiana, where the McNamara case was filed, did not respond to a request for clarification about the possible pass-through billing aspect.
McNamara allegedly worked in the scheme with three telemedicine and call center companies in Florida. “These call centers engaged in aggressive telemarketing campaigns, wherein telemarketers lied to and deceived beneficiaries, hundreds of which were referred to the McNamara labs for testing,” the indictment said.
Physicians via telemedicine allegedly signed off on the test orders. Further, McNamara allegedly created a “coding framework” for the telemedicine doctors to use when ordering the tests.
McNamara allegedly paid kickbacks to the call centers and telemedicine companies in exchange for referrals. He concealed payments by making them appear to be for legitimate services, such as account management work, the DOJ said.
The government also alleged that McNamara, co-conspirators, and others laundered their reimbursement money into shell companies and bank accounts signed by various individuals.
McNamara’s attorney, Randy Chartash, told KMBC News in Kansas City, Mo., “Mr. McNamara is innocent and is looking forward to trial to vindicate his innocence.” Chartash did not return a request for comment from The Dark Report.
Emylee Thai, 37, of Santa Ana, Calif., was charged with one count of conspiracy to commit healthcare fraud, one count of conspiracy to defraud the U.S., and three counts of payment of kickbacks in connection with a federal healthcare program.
Thai is a clinical diagnostics lab owner who ran ApolloMDX (later known as Artemis DNA TX) in Harris County, Texas, which is now closed. Thai currently operates Artemis DNA CA in Irvine, Calif.
Multiple Federal Charges
Prosecutors charged Thai with one count of conspiracy to commit healthcare fraud, one count of conspiracy to defraud the U.S. and receive kickbacks, and three counts of payment of kickbacks in connection with a federal healthcare program.
From December 2019 through May 2022, Thai allegedly contracted with marketers in New Jersey and Delaware to refer genetic test orders and DNA samples to ApolloMDX in exchange for a percentage of the reimbursements. The DOJ said the testing was not medically necessary.
During this period, Thai’s lab billed Medicare $142 million for genetic testing and received $95 million on those claims.
“Thai and others altered and fabricated doctors’ orders to reflect false diagnoses of beneficiaries’ medical conditions to make the beneficiaries appear eligible for genetic testing,” according to the indictment.
She also allegedly made it appear that certain samples had been collected on multiple dates so that she could bill them as such, when the samples had been collected on a single date.
Owner Runs Afoul of CMS
David Christopher Thigpen, 48, of Hammond, La., was charged with one count of conspiracy to commit healthcare fraud, seven counts of healthcare fraud, and four counts related to kickbacks.
Thigpen owned Akrivis Laboratories in Hammond and Dynamic Diagnostics in Bay St. Louis, Miss. From March 2014 through January 2021, he allegedly submitted $54 million in claims for urine drug testing and genetic testing that were not medically necessary and tainted by kickbacks to marketing firms, according to the indictment. Medicare reimbursed Akrivis and Dynamic $9.5 million.
He allegedly worked with five marketing companies in Louisiana and Mississippi that solicited providers for Akrivis’ urine drug tests and were paid, on a per specimen basis, by Thigpen for specimens referred to the lab.
After being scrutinized for this practice by the local Medicare Administrative Contractor and private insurer Humana, the federal Centers for Medicare and Medicaid Services (CMS) suspended payments to Akrivis in September 2019.
In response, Thigpen allegedly shifted the urine test billing to Dynamic Diagnostics but continued to run the tests through Akrivis. CMS caught on and suspended payments to Dynamic in January 2021, the DOJ said.
DNA Specimen Kickbacks
Tara Pendergraft, 45, of Chalfont, Pa., was charged with conspiracy to defraud the U.S. government and paying kickbacks.
Pendergraft co-owned Best Care Laboratory in New Jersey. Authorities alleged that she billed Medicare for $93 million for genetic testing that was medically unnecessary or procured through kickbacks. Medicare paid Best Care $14 million based on these submissions.
She and an unnamed co-owner paid kickbacks to referral companies in return for DNA specimens and orders for unnecessary genetic tests, according to the DOJ.
Attempts to reach an attorney listed online as representing Pendergraft were not successful. Thai and Thigpen did not respond to requests for comment from The Dark Report.
Federal Prosecutors Name Defendants in Telehealth/Genetic Testing Fraud Case
FEDERAL PROSECUTORS NAMED other defendants in the $562 million criminal case:
- Joseph Dauch, 47, Parkland, Fla., charged in a $21 million fraud scheme to send genetic test referrals to labs in exchange for kickbacks through his marketing companies.
- Colby Edward Joyner, 34, Monroe, N.C., physician assistant, charged with ordering medically unnecessary genetic cancer and pharmacogenetic tests via telemedicine visits.
- Marion Shaun Lund, 52, Taylor, Miss., podiatrist, charged in a scheme involving $3.8 million in fraudulent foot bath prescriptions and molecular diagnostic testing of toenails.
- John Manning, 61, Ashland, Tenn., physician, charged in a conspiracy to bill $41 million for medically unnecessary genetic cancer tests, among other services.
- Vinit Patel, 67, Hoover, Ala., physician, charged with accepting kickbacks in exchange for ordering medically unnecessary genetic tests and submitting $3.4 million in false claims.
- Henry Rojas, 66, Hopewell Junction, N.Y., physician, charged with conspiracy to commit $7.9 million in fraud by ordering medically unnecessary genetic laboratory tests in exchange for kickbacks.
- Omar Saleh, 36, Naples, Fla., physician, charged with authorizing more than $2.6 million in billings for medically unnecessary genetic test orders in exchange for kickbacks.
- Todd Shull, 48, Fort Lauderdale, Fla., charged with conspiring to receive $1.3 million in kickbacks in exchange for referring genetic testing orders as part of his marketing work.
- Ronnie Spiegel, 44, Staten Island, N.Y., laboratory representative, charged in $18 million scheme to pay kickbacks in exchange for ordering medically unnecessary genetic testing.